Yield-Hungry Investors Are Feasting on T-Bills

[A HERETIC I AM]

6. Current US Treasury Yields from Bloomberg

Last edited Mon Jun 12, 2023, 01:14 PM - Edit history (1)

https://www.bloomberg.com/markets/rates-bonds/government-bonds/us


Just to make sure this is clear, the yield quoted for paper of less than 12 months maturity is ANNUALIZED yield.

In other words, if you bought $1000 face value of the 3 month Bill, you would have to roll it 3 more times at the same yield in order to realize that 5.24% quoted at the link above. You aren't going to realize $52.40 in 3 months, rather you would gain one quarter of that, or about $13.10. $13.10 X 4 = $52.40 on one thousand dollars face value of this paper.

Here is a page from TreasuryDirect showing the auction results for 91 day T-Bills. Note the price. It says "98.698194". If this is purchased as a $1,000.00 face value bill, then it's easy to figure how much it costs by just moving the decimal over one place to the right. - $986.98. At the end of the 91 days the Treasury will redeem this bond for one thousand dollars, giving you a gain of $13.02. Again, as I said above, roll that 3 more times at the same price and you have a 5.208% yield. Of course the yield can and does change, so there is no guarantee that the next time you go to buy 90 day paper it would have the same yield. It could be less or it could be more.

It's important to remember that these prices are not engraved in stone, and the linked page is an auction result, not a sales contract or retail pricing sheet. Since this paper trades robustly on the secondary market, you can expect to pay either more or less on the day you buy, based on market trends that day.

As far as where these securities can be purchased, other than setting up an account with TreasuryDirect, any retail brokerage firm that has a bond desk (which is most of them) can sell you Treasury Bonds. They may have a purchase minimum however, of perhaps $5,000 or more.


Lastly, this current situation is a classic example of what is called an "inverted yield curve" meaning the shorter maturities have a higher yield than the longer ones.